Compensation for Refusal of a New Business Tenancy

Originally published June 2004

Pursuant to section 30(1) of the Landlord and Tenant Act 1954, a tenant is entitled to compensation where a landlord opposes the grant a new tenancy in a section 25 notice or a counter-notice to a tenant's section 26 request on grounds which do not relate to a default on the part of a tenant.

Those grounds are as follows:

Section 30(1) (e) - where the tenancy was created through subletting part of the premises which the landlord would be able to let as a whole for a higher rent and the landlord intends to let or dispose of the whole of the premises on the termination of the tenancy

Section 30(1) (f) - where the landlord intends to redevelop the premises on the termination of the tenancy

Section 30 (1) (g) - where the landlord intends to occupy the premises on the termination of the tenancy

Prior to the reforms to the 1954 Act, a tenant was entitled to claim compensation for the disruption of having to leave premises if:

one or more of the above grounds were cited by a landlord even if the tenant did not apply to the Court for a new tenancy

if a tenant were to apply to the Court for a new tenancy and subsequently withdraw the application

if the Court ordered that the landlord be given possession of the premises.

The basis on which the amount of compensation payable is calculated has not been altered by the reforms and is determined by reference to the rateable value of the premises occupied by a tenant for the purposes of his business. The amount of compensation is either one times the rateable value, or twice the rateable value. The higher rate of compensation is payable if the tenant has occupied the premises or part thereof for 14 years immediately preceding the termination date or if the tenant takes up occupation of the premises by assignment and those premises have been occupied for that period by the tenant's predecessor in title.

Changes to the Compensation Following the Reforms

Pursuant to the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003, which came into force on 1st June 2004, the 1954 Act has been amended to separate a tenant's entitlement to compensation into 3 areas :-

Section 37(1)(A) where a Court is prevented from making an order granting a new tenancy by virtue of grounds (e), (f) or (g).

Section 37(1)(B) where a landlord succeeds in an application for a termination order on grounds (e), (f) or (g)

Section 37(1)(C) where a landlord opposes renewal on grounds (e)...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT